Thursday, November 10, 2005

1. I shop at the Gap sometimes. I'm sure others have various reasons for regarding this as objectionable, but, for the purposes of this post, whatever.

2. In my experience, the Gap always has some really ugly button-down shirts on sale at a much cheaper price (say $15) than its regularly priced shirts (say $35).

3. The really ugly shirts are usually really ugly because they have some displeasingly unorthodox combination of colors in some displeasingly unorthodox arrangement.

4. All else being equal, orthodoxy has to be as cheap to make as unorthodoxy. In other words, it's not like it costs the Gap less to make non-ugly shirts, and might even cost more.

5. I've always imagined that the really ugly shirts at the Gap originally sold for a much higher price ($35), didn't sell because they were so ugly, and now the Gap is trying to unload them more cheaply ($15).

6. But, while the Gap has some selections I don't like at all prices, the $35 shirts are never quite as ugly as the $15 shirts. If the really ugly shirts languished $35 and then, only because they languished, the Gap decided it needed to move them by slashing the price to $15, you'd think I'd see them at the higher price more often than I ever do.

7. Upon reflection, it probably makes more sense to presume that the Gap knows more than I do about making shirts and especially about making money from selling shirts.

8. Say the really ugly shirts are being sold at a loss. It could be to the Gap's advantage to have some relatively inexpensive shirts to affect the overall perception that there are good deals to be had the Gap. After all, it is one more big red SALE sign. But, if they were willing to offer some shirts at a loss just for the perception of having SALE values around, it'd still be in their interest in selling as few of those shirts as possible. So, make them really ugly.

9. The Gap might be making money even when it the really ugly shirts at the sale price (say $5). But they make way more money when they sell less ugly shirts at a higher price (say, $5 vs. $25).

10. Even if they do make money on the really ugly shirts, it could be like a bait-and-switch. The existence of sale shirts gets you in the store, the ugliness of the shirts discourages their actual purchase, but now that you are in the store you can be subjected to the ministrations of their sales clerks to buy something else.

11. When I see ugly shirts in stores, my inclination is to marvel at the variation that exists in people's aesthetic preferences. But when I see those ugly shirts on the sale rack, maybe what I should be marveling at is the variation in people's preferences about prices.

12. People come into the Gap with all kinds of variation on how much they are willing to pay for a shirt. But the Gap cannot charge different prices in the same store for the same shirt.

13. Consider somebody who gives some premium to the Gap brand, but otherwise values price much more than they value aesthetics. They buy the ugly shirt and the Gap makes money on them. As opposed to offering a shirt that is low-priced because it is shoddily made, the ugly shirt does not Gap's reputation for how well-made their clothes are. It's just ugly. It could even be regarded as "daring."

14. It wouldn't make sense for the Gap to offer shirts at the lower-price point if it cost them sales at the higher-price point. If people didn't much prefer higher-price point shirts to the lower-price point shirts, even people who could otherwise be persuaded to pay $35 for a shirt would pay $15. So the $15/shirt racky is a risky one, and so the shirts at better be really ugly. Which they are.

[Okay, I'm going to stop now. But this actually gets weirder and more sinister, because now I realize that the whole reason I've been to the Gap more lately than I'd ever gone in Madison is that there are not a lot of men's clothing stores in the Porter Square area anyway. I'm sure the Gap is paying a premium rent for that exclusivity, and now they have male customers in a position of a much larger convenience trade-off than Gaps in malls have. For reasons to complicated for me to try to articulate now, I think this provides the Gap with an even stronger incentive to serve up objectively ugly shirts.

But, seriously, maybe all this is obvious to everyone else, but this is an epiphany for me. (Granted, sort of one of those I've-been-a-moron-all-this-time epiphanies, but still.) The ugly shirts are intentionally ugly. They could just as easily make non-ugly shirts, but if they put those non-ugly shirts on that sale rack, they would sell fewer of their higher-priced shirts.]

Two comments ... one, all this assumes knowing in advance what will be aesthetically displeasing and that it is stable enough across space and time to plan production around it (which, admittedly, is more flexible than ever, but surely not this flexible), so not likely pal ... two, my god, you've been hanging out with economists waaaaaayyyyy too much :)

1) Have you ever, ever actually seen anyone wearing one of the ugly Gap shirts? (Not YOU, surely.)2) Buy something off the sidewalk rack (they drag it out on Saturdays), corner of Mass Ave and Shepard St.

wal-mart operates on a similar logic: offer a few truly discounted/really good sale priced items in front and scattered about to create the impression that wal-mart really does have the lowest prices, while all the while offering other items at prices comparable to, or greater than, other area stores. of course, wal-mart is scared of google and other emerging technologies that will tell consumers precisely where the best deal on any item can be had in a given geographic area.

So, does God make ugly people on purpose, to wear those shirts? The Mass Ave\Shepard St. sidewalk racks are there only to encourage us to talk to one another, as we pretend to look for bargains (such shy people in Cambridge).

I suppose that there could be a selection bias occuring. Suppose that after the design process, there is a test marketing step (either focus groups, sample stores, ect.). If, at the end of this second step, certain shirts are determined to look like ass, they are given a reduced price. Why design and produce ugly shirts, one might ask? Why not cut out the middle man, and instead of designing beat-with-the-ugly-stick shirts, just make good shirts? A lack of signaling from those that suggest what mass opinion might be and those who design might be at fault. Or just some designers suck, both seem likely. The end result would be a product probably too ugly, and somewhat over produced that got made anyways. But despite being ugly, some people will still buy it. Thus it goes into store and crowds up the racks.